What changed in this filing

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Item 1. Business

2024-02-29 compared with 2023-03-02 · 74 added, 117 removed, 522 unchanged (27% of the section changed)

18 unchanged sentences

Spin-Transfer Torque MRAM

Spin Transfer Torque MRAM (STT-MRAM) technology can be tuned to deliver products in Dynamic Random Access Memory (DRAM), SRAM and NOR Flash applications.

STT-MRAM technology can be tuned to deliver products in Dynamic Random Access Memory (DRAM), SRAM and NOR Flash applications.

Our STT-MRAM products targeting DRAM replacement started production in 2017 and are currently shipping in 256Mb and 1Gb densities.

These high density, high performance persistent memories are delivering significant value to SSD, Persistent Memory Cards, Fabric Accelerator, and other applications in the data center market.

These high density, high performance persistent memories are

delivering significant value to SSD, Persistent Memory Cards, Fabric Accelerator, and other applications in the data center market.

We offer these products with DDR3 and DDR4 derivative interfaces, facilitating the replacement of battery-backed DRAM with STT-MRAM.

STT-MRAM enabled scaling of our Toggle MRAM products to higher densities on advanced CMOS nodes.

In 2022, we started production of high density (8Mb to 128Mb) STT-MRAM products on 28nm CMOS node with standardized SPI, QSPI, and Octal SPI (OSPI) interfaces.

In 2022, we started production of high density (8Mb to 128Mb) STT-MRAM products on 28nm CMOS node with standardized SPI, xSPI, QSPI, and Octal SPI (OSPI) interfaces.

These products are enabling our customers to simplify their system architecture and easily replace legacy memory components like SRAM and FRAM.

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In addition, there is a security concern with the download of the configuration bit stream from the NOR to the SRAM.

We have developed our STT-MRAM technology to act as the "configuration memory” in a FPGA eliminating the security concern and enabling instant-on characteristics.

Furthermore, the STT-MRAM based configuration memory can be programmed multiple times with OTA updates or can be hard coded depending on the application.

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● We have completed patent sales by transferring, assigning, and delivering patents to customers.

● We have executed agreements for the development of a strategic radiation hardened (RAD-Hard) field programmable gate array product, consisting of technology and design licenses.

Foundry Services Overview

In our Chandler facility, we perform BEOL manufacturing services for customers who want to add MRAM and TMR sensor functionality to their memory or application base circuits.

These services allow aerospace and satellite electronic system manufacturers to integrate our EAR99 technology that is able to withstand exposure to the levels of radiation encountered in avionics and space applications by virtue of such technology being magnetic rather than electrical charge based which would be susceptible to alpha particles.

These services allow aerospace and satellite

electronic system manufacturers to integrate our EAR99 technology that is able to withstand exposure to the levels of radiation encountered in avionics and space applications by virtue of such technology being magnetic rather than electrical charge based which would be susceptible to alpha particles.

Sales and Marketing

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During the year ended December 31, 2023, more than 1,400 end customers purchased our products.

Our four largest end customers together accounted for 24% of our total revenue for the year ended December 31, 2022, and one of these customers accounted for more than 10% of our revenue during that period.

Our four largest end customers together accounted for 47% of our total revenue for the year ended December 31, 2021, and one of these customers individually accounted for more than 10% of our total revenue during the period.

Our two largest end customers together accounted for 22% of our total revenue for the year ended December 31, 2023, and each of these customers accounted for more than 10% of our revenue during that period.

Our four largest end customers together accounted for 24% of our total revenue for the year ended December 31, 2022, and one of those customers individually accounted for more than 10% of our total revenue during the period.

Manufacturing

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Our manufacturing agreement with GLOBALFOUNDRIES includes a customary forecast and ordering mechanism for the supply of certain of our wafers, and we are obligated to order and pay for, and GLOBALFOUNDRIES is obligated to supply, wafers consistent with the binding portion of our forecast.

GLOBALFOUNDRIES also has the ability to discontinue its manufacture of any of our wafers upon due notice and completion of the notice period.

GLOBALFOUNDRIES also has the ability to discontinue its manufacture of any of our wafers upon due notice and

completion of the notice period.

The initial term of the manufacturing agreement is for three years, which automatically renews for successive one year periods thereafter unless either party provides sufficient advance notice of non-renewal.

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Our principal competitors to our Toggle MRAM products include companies that offer nonvolatile SRAM (NVSRAM), SRAM, and FRAM products, such as Infineon, Fujitsu, Integrated Silicon Solution (ISSI), Macronix, Microchip, Micron, Renesas, Samsung and Toshiba.

Our STT-MRAM products replace discrete NOR, DRAM and SRAM where persistence is required and thus compete with DRAM and SRAM suppliers such as Hynix, Micron, Winbond, Samsung, and several other smaller companies.

Our STT-MRAM products replace discrete NOR, DRAM and NVSRAM where persistence is required and thus compete with DRAM and NVSRAM suppliers such as Hynix, Micron, Winbond, Samsung, and several other smaller companies.

In the future we may also face competition from companies developing MRAM technologies, such as Avalanche, Samsung and other larger and smaller semiconductor companies.

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To accomplish this, we rely on a combination of intellectual property rights, including patents, trade secrets, copyrights, and trademarks, as well as customary contractual protections.

As of December 31, 2022, we held 520 issued patents that expire at various times between February 2023 and October 2042 and had 146 patent applications pending.

As of December 31, 2023, we held 529 issued patents that expire at various times between March 2026 and February 2044 and had 136 patent applications pending.

Included in our issued patents and pending applications are patents/applications in the United States, China, Europe, France, Germany, Ireland, Italy, Japan, the Netherlands, the Republic of Korea, Singapore, Taiwan, and the United Kingdom.

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Any failure by us to adequately control the storage, use, discharge, and disposal of regulated substances could result in significant future liabilities.

As of December 31, 2022, we had 74 total employees in the United States, all of which were full-time employees, and 15 full-time equivalent and 3 part-time equivalent contractors and consultants in China, Germany, Italy, Japan, Malaysia, Singapore, and Taiwan.

As of December 31, 2023, we had 83 total employees in the United States, of which 82 were full-time employees and one was a part-time employee, along with 18 full-time equivalent and four part-time equivalent contractors and consultants in the United States, China, Germany, Italy, Japan, Malaysia, Singapore, and Taiwan.

None of our employees are either represented by a labor union or subject to a collective bargaining agreement.

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If any of the following risks or such other risks actually occurs, our business, financial condition, results of operations and cash flows could be harmed.

In addition, many of the following risks and uncertainties may be exacerbated by the ongoing COVID-19 pandemic, including any new variants that may become predominant, and any worsening of the global business and economic environment as a result.

Risk Factors Related to Our Financial Condition and Our Indebtedness

Risk Factors Related to Our Financial Condition

We may need additional funding and may be unable to raise capital when needed, which could force us to delay, reduce, or eliminate planned activities.

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As of December 31, 2023, we had cash and cash equivalents of approximately $36.9 million.

Based on our current operating plan, we believe our existing cash and cash equivalents, coupled with availability under our credit facility and our anticipated growth and sales levels, will be sufficient to meet our anticipated cash requirements for at least the next 12 months.

Based on our current operating plan, we believe our existing cash and cash equivalents, coupled with our anticipated growth and sales levels, will be sufficient to meet our anticipated cash requirements for at least the next 12 months.

However, our existing capital may be insufficient to meet our long-term requirements.

We have no committed sources of funding other than our revolving line of credit facility and there is no assurance that additional funding will be available to us in the future or be secured on acceptable terms.

We have no committed sources of funding and there is no assurance that additional funding will be available to us in the future or be secured on acceptable terms.

If adequate funding is not available when needed, we may be forced to curtail operations, including our commercial activities and research and development programs, or cease operations altogether, file for bankruptcy, or undertake any combination of the foregoing.

In such event, our stockholders may lose their entire investment in our company.

Further, we may need to raise additional funds through financing or borrowings in order to accomplish our long-term planned objectives.

Further, we may need to raise additional funds through financings or borrowings in order to accomplish our long-term planned objectives.

If we raise additional funds through issuances of equity, convertible debt securities or other securities convertible into equity, our existing stockholders could suffer significant dilution in their percentage ownership of our company, and any new equity securities we issue could have rights, preferences, and privileges senior to those of holders of our common stock.

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While our products offer unique benefits over other industry memory technologies, the rate of adoption of our products and our ability to capture market share from legacy technologies is uncertain.

Our revenue may also be adversely impacted by a number of other possible reasons, many of which are outside our control, including business conditions that adversely affect the semiconductor memory industry resulting in a decline in end market demand for our products, adverse impacts resulting from the COVID-19 pandemic, increased competition, ongoing supply chain constraints, or our failure to capitalize on growth opportunities.

We also rely on achieving specific cost reduction targets

that have uncertainty in their timing and magnitude.

We may also incur unforeseen expenses in the ongoing operation of our business that cause us to exceed our operational spending plan.

Our revenue may also be adversely impacted by a number of other possible reasons, many of which are outside our control, including business conditions that adversely affect the semiconductor memory industry resulting in a decline in end market demand for our products, adverse impacts resulting from COVID-19, increased competition, ongoing supply chain constraints, or our failure to capitalize on growth opportunities.

We also rely on achieving specific cost reduction targets that have uncertainty in their timing and magnitude.

We may also incur unforeseen expenses in the ongoing operation of our

business that cause us to exceed our operational spending plan.

As a result, our ability to generate sufficient revenue growth and/or control expenses to transition to profitability and generate consistent positive cash flows is uncertain.

Provisions of our credit facility may restrict our ability to pursue our business strategies.

Borrowings under our existing credit facility are secured by substantially all of our assets, except for intellectual property.

Additionally, the operating restrictions and covenants relating to our existing credit facility restrict, and any future financing agreements that we may enter into may further restrict, our ability to finance our operations, engage in business activities or expand or fully pursue our business strategies.

For example, our existing credit facility prohibits our ability to, among other things:

● dispose of or sell assets;

● consolidate or merge with other entities;

● incur additional indebtedness;

● create liens on our assets;

● pay dividends;

● make investments;

● enter into transactions with affiliates;

● redeem subordinated indebtedness.

These restrictions are subject to certain exceptions.

In addition, our existing credit facility requires that we meet certain operating covenants, such as maintaining insurance on the collateral and meeting certain financial covenants, such as maintaining a minimum cash balance and availability under our revolving line of credit facility.

Our ability to comply with these covenants may be affected by events beyond our control, and we may not be able to meet those covenants.

A breach of any of these covenants could result in an event of default under the credit facility.

We are required to make mandatory prepayments of the outstanding loan upon the acceleration by lender following the occurrence of an event of default, along with a payment of the end of term fee, the prepayment fee and any other obligations that are due and payable at the time of prepayment.

In the event of default, the interest rate in effect will increase by 5.0% per annum.

Risk Factors Related to Our Business and Our Industry

The ongoing COVID-19 global pandemic has adversely affected, and is expected to continue to adversely affect, our business, results of operations and financial condition.

The widespread outbreak of any other illnesses or communicable diseases could also adversely affect our business, results of operations and financial condition.

We could be negatively impacted by the widespread outbreak of an illness, any other communicable disease or any other public health crisis that results in economic and trade disruptions, including the disruption of global supply chains.

More recently, new variants of COVID-19 have emerged.

The spread of these new strains caused many government authorities and businesses to implement measures to try to reduce the spread that had become less prevalent.

While some of these restrictions have begun to be lifted, the lingering impact of the COVID-19 pandemic continues to create significant volatility throughout the global economy, including supply chain constraints, labor supply issues, and higher inflation.

Accordingly, it is unclear at this point the full impact COVID-19 and its variants will have on the global economy and on our Company.

As a result of the COVID-19 pandemic and the related responses from government authorities, our business, results of operations and financial condition have been adversely impacted.

For example, we have experienced electronics supply chain and demand disruptions from extended factory shutdowns, particularly in some Asian countries, which

created unusual order patterns, and subsequently slowed Toggle MRAM demand, particularly from our industrial customers.

Further, in an effort to protect the health and safety of our employees, we took the following actions:

transitioned most of our office and support employees and contractors to working from home;

suspended all non-essential business travel;

and implemented social distancing guidelines for our employees and contractors who must work in our manufacturing and laboratory locations.

Additionally, our business, results of operations and financial condition have been and may be further impacted in several ways, including, but not limited to, the following:

● further disruptions to our operations, including due to additional facility closures, restrictions on our operations and sales, marketing and distribution efforts and/or interruptions to our research and development activities, product development and other important business activities;

● further reduced demand for our products, particularly due to disruptions to the businesses and operations of our customers;

● interruptions, availability or delays in global shipping to transport our products;

● further slowdowns, stoppages or other limitations in the supply chain for our products, in addition to higher costs, such as due to suppliers raising prices;

● limitations on employee resources and availability, including due to sickness, government restrictions, labor supply shortages, and the desire of employees to avoid contact with large groups of people or mass transit disruptions;

● a continuation or worsening of general economic conditions, including increased inflation;

● greater difficulty in collecting customer receivables;

● a fluctuation in foreign currency exchange rates or interest rates could result from market uncertainties;

● an increase in the cost or the difficulty to obtain debt or equity financing could affect our financial condition or our ability to fund operations or future investment opportunities.

Additionally, COVID-19 could impact our internal controls over financial reporting as a portion of our workforce is required to work from home and therefore new processes, procedures, and controls could be required to respond to changes in our business environment.

Further, should any key employees become ill from COVID-19 and unable to work, the attention of the management team could be diverted.

The emergence of different variants of COVID-19 and the prevalence of breakthrough cases of infection among fully vaccinated people adds additional uncertainty and could result in further impacts to our business and operations, including those discussed above.

Although we will continue to monitor the situation and take further actions, which may include further altering our operations, in order to protect the best interests of our employees, customers and suppliers and comply with government requirements, there is no certainty that such measures will be enough to mitigate the risks posed by the virus, and our ability to perform critical functions could be harmed.

Any of the foregoing could adversely affect our business, results of operations and financial condition.

The potential effects of COVID-19 may also impact many of our other risk factors discussed in this “Risk Factors” section.

The ultimate extent of the impact of the COVID-19 pandemic on our business, results of operations and financial condition will depend on future developments, which are highly uncertain, continuously evolving and cannot be predicted, including, but not limited to the duration and spread of the COVID-19 outbreak and its severity;

the emergence and severity of its variants;

the actions to contain the virus or treat its impact, such as the availability and efficacy of vaccines (particularly with respect to emerging strains of the virus) and potential hesitancy to use them;

general economic factors, such as increased inflation;

supply chain restraints;

labor supply issues;

and how quickly and to what extent normal economic and operating conditions can resume.

The limited history of STT-MRAM adoption makes it difficult to evaluate our current business and future prospects.

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We have been shipping magnetoresistive random-access memory (MRAM) products since our incorporation in 2008.

However, we only began to manufacture and ship our Spin Transfer Torque MRAM (STT-MRAM) products in the fourth quarter of 2017.

Our limited experience selling our STT-MRAM products, combined with the rapidly evolving and competitive nature of our market, makes it difficult to evaluate our current business and future prospects.

However, we only began to manufacture and ship our STT-MRAM products in the fourth quarter of 2017.

We began to manufacture our second set of STT-MRAM products targeting the NVSRAM markets in the fourth quarter of 2022.

Our limited experience in selling our STT-MRAM products, combined with the rapidly evolving and competitive nature of our markets, makes it difficult to evaluate our current business and future prospects.

In addition, we have limited insight into emerging trends that may adversely affect our business, financial condition, results of operations and prospects.

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If we do not compete successfully, our market share and revenue may decline.

We compete with large semiconductor manufacturers and designers and others, and our current and potential competitors have longer operating histories, significantly greater resources and name recognition and a larger base of customers than we do.

We compete with large semiconductor manufacturers and designers and others, and our current and

potential competitors have longer operating histories, significantly greater resources and name recognition and a larger base of customers than we do.

This may allow them to respond more quickly than we can to new or emerging technologies or changes in customer requirements.

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In addition, the time and expense to qualify a new foundry could result in additional expense, diversion of resources or lost sales, any of which would negatively impact our financial results.

If any of our current or future foundries or packaging, assembly and testing subcontractors significantly increases the costs of wafers or other materials or services, interrupts or reduces our supply, including for reasons outside of their control, such as due to the COVID-19 pandemic, or if any of our relationships with our suppliers is terminated, our operating results could be adversely affected.

If any of our current or future foundries or packaging, assembly and testing subcontractors significantly increases the costs of wafers or other materials or services, interrupts or reduces our supply, including for reasons outside of their control, such as due to COVID-19, or if any of our relationships with our suppliers is terminated, our operating results could be adversely affected.

Such occurrences could also damage our customer relationships, result in lost revenue, cause a loss in market share, or damage our reputation.

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If we fail to procure sufficient components used in our products, we may be unable to deliver our products to our customers on a timely basis, which could lead to customer dissatisfaction and could harm our reputation and ability to compete.

We would likely experience significant delays or cessation in producing some of our products if a labor strike, natural disaster, public health crisis, geopolitical event, or other supply disruption were to occur, including as a result of the COVID-19 pandemic or the military conflict in Ukraine, at any of our main suppliers.

We would likely experience significant delays or cessation in producing some of our products if a labor strike, natural disaster, public health crisis, geopolitical event, or other supply disruption were to occur, including as a result of COVID-19 or the military conflict in Ukraine, at any of our main suppliers.

Further, the upturn in the semiconductor industry has stretched the supply chain, and we are subject to supply shortages, as well as higher costs as suppliers opportunistically raise prices.

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Due to this generally lengthy design cycle, we may experience significant delays from the time we increase our operating expenses and make investments in our products to the time that we generate revenue from sales of these products.

Moreover, even if a customer selects our solution, we cannot guarantee that this will result in any sales of our products, as the customer may ultimately change or cancel its product plans, or efforts by our customer to market and sell its product may not be successful.

product may not be successful.

We may not generate any revenue from design wins after incurring the associated costs, which would cause our business and operating results to suffer.

If a current or prospective customer incorporates a competitor’s solution into its product, it becomes significantly more difficult for us to sell our solutions to that customer because changing suppliers involves significant time, cost, effort, and risk for the customer even if our solutions are superior to other solutions and remain compatible with their product design.

Our ability to compete successfully depends on customers viewing us as a stable and reliable supplier to

mission-critical customer applications when we have less production capacity and less financial resources compared to most of our larger competitors.

Our ability to compete successfully depends on customers viewing us as a stable and reliable supplier to mission-critical customer applications when we have less production capacity and less financial resources compared to most of our larger competitors.

If current or prospective customers do not include our solutions in their products and we fail to achieve a sufficient number of design wins, our results of operations and business may be harmed.

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We have derived and expect to continue to derive a significant portion of our revenues from a small group of customers during any particular period due in part to the concentration of market share in the semiconductor industry.

The loss of a significant customer, a business combination among our customers, a reduction in orders or decrease in price from a significant customer or disruption in any of our commercial or distributor arrangements may result in a significant decline in our revenues and could have a material adverse effect on our business, liquidity, results of operations, financial condition, and cash flows.

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As a result, we periodically evaluate the benefits of migrating our solutions to other technologies to improve performance and reduce costs.

These ongoing efforts require us from time to time to modify the

manufacturing processes for our products and to redesign some products, which in turn may result in delays in product deliveries.

These ongoing efforts require us from time to time to modify the manufacturing processes for our products and to redesign some products, which in turn may result in delays in product deliveries.

For example, as smaller line width geometry manufacturing processes become more prevalent, we intend to move our future products to increasingly smaller geometries to integrate greater levels of memory capacity and/or functionality into our products.

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The members of our management and our key employees are at-will.

If we lose the services of any key senior management member or employee, we may not be able to locate suitable or qualified replacements, and may incur additional expenses to recruit and train new personnel, which could severely impact our business and prospects.

If we lose the services of any key senior management member or employee, we may not be able to locate suitable or qualified replacements, and may incur additional expenses to recruit and train new

personnel, which could severely impact our business and prospects.

The loss of the services of one or more of our key employees, especially our key engineers, or our inability to attract and retain qualified engineers, could harm our business, financial condition, and results of operations.

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The success and profitability, as well as the expansion, of our international operations are subject to numerous risks and uncertainties, many of which are outside of our control, such as the following:

● public health issues, such as the COVID-19 pandemic, which can result in varying impacts to our business, employees, partners, customers, distributors or suppliers internationally as discussed elsewhere in this “Risk Factors” section;

● public health issues, such as COVID-19, which can result in varying impacts to our business, employees, partners, customers, distributors or suppliers internationally as discussed elsewhere in this “Risk Factors” section;

● difficulties, inefficiencies and costs associated with staffing and managing foreign operations;

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Our inability to capitalize on or realize substantial revenue from our significant investments in research and development could harm our operating results and distract management, harming our business.

Interruptions in our information technology systems could adversely affect our business.

We rely on the efficient and uninterrupted operation of complex information technology systems and networks to operate our business.

Any significant disruption to our systems or networks, including, but not limited to, new system implementations, computer viruses, security breaches, facility issues, natural disasters, terrorism, war, telecommunication failures or energy blackouts, could have a material adverse impact on our operations, sales, and financial results.

Such disruption could result in a loss of our intellectual property or the release of sensitive competitive information or supplier, customer, or employee personal data.

Any loss of such information could harm our competitive position, result in a loss of customer confidence, and cause us to incur significant costs to remedy the damages caused by any such disruptions or security breaches.

Additionally, any failure to properly manage the collection, handling, transfer, or disposal of personal data of employees and customers may result in regulatory penalties, enforcement actions, remediation obligations, litigation, fines, and other sanctions.

We may experience attacks on our data, attempts to breach our security and attempts to introduce malicious software into our IT systems.

Interruptions in or other compromises of our information technology systems or data or that of third parties upon whom we rely could adversely affect our business.

We rely on the efficient, uninterrupted and uncompromised operation of complex information technology systems and networks (and those of third parties) to operate our business.

Any significant disruption to or other compromise of our systems, networks or data (or those of third parties upon whom we rely), including, but not limited to, due to new system implementations, computer viruses, social-engineering attacks, personnel (including former personnel) misconduct or error, supply-chain attacks, ransomware attacks, software bugs, software or hardware failure, security breaches, facility issues, natural disasters, terrorism, war, telecommunication failures, energy blackouts, loss, theft or similar threats, could have a material adverse impact on our operations, sales, and financial results.

Such disruption or other compromise could result in a loss of our intellectual property or the release of sensitive competitive information or supplier, customer, personnel or other relevant stakeholder’s personal data.

Additionally, future or past business

transactions (such as acquisitions or integrations) could expose us to additional cybersecurity risks and vulnerabilities, as our systems could be negatively affected by vulnerabilities present in acquired or integrated entities’ systems and technologies.

Furthermore, we may discover security issues that were not found during due diligence of such acquired or integrated entities, and it may be difficult to integrate companies into our information technology environment and security program.

Any loss of such information could harm our competitive position, result in a loss of customer confidence, result in breaches of applicable obligations (such as laws and contracts) and cause us to incur significant costs to remedy the damages caused by any such disruptions or security breaches.

Additionally, any failure to properly manage the collection, handling, transfer, or disposal of personal data of employees and customers may result in regulatory penalties, bans on processing personal data or orders not to use or destroy data, enforcement actions, remediation obligations, litigation, fines, and other actions.

We may experience attacks on our data and/or information systems, attempts to breach our security and attempts to introduce malicious software into our IT systems.

Such threats are prevalent and continue to rise, are increasingly difficult to detect, and come from a variety of sources.

During times of war and other major conflicts, we and the third parties upon which we rely may be vulnerable to a heightened risk of these attacks.

If attacks are successful, we may be unaware of the incident, its magnitude, or its effects until significant harm is done.

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Such attacks or disruptions could have a material adverse impact on our business, operations, and financial results.

Attempts to gain unauthorized access to our IT systems or other attacks have in the past, in certain instances and to certain degrees, been successful (but have not caused significant harm), and may in the future be successful, and in some cases, we might be unaware of an incident or its magnitude and effects.

Third-party service providers, such as wafer foundries, assembly and test contractors, distributors and other vendors have access to certain portions of our and our customers’ sensitive data.

Our ability to monitor these third parties’ information security practices is limited, and these third parties may not have adequate information security measures in place.

In the event that these service providers do not properly safeguard the data that they hold, security breaches and loss of data could result.

Any such loss of data by our

third-party service providers could negatively impact our business, operations, and financial results, as well as our relationship with our customers.

Any such loss of data by our third-party service providers could negatively impact our business, operations, and financial results, as well as our relationship with our customers.

While we have implemented security measures designed to protect against security incidents, there can be no assurance that these measures will be effective.

We take steps designed to detect, mitigate, and remediate vulnerabilities in our information systems (such as our hardware and/or software, including that of third parties upon which we rely).

We may not, however, detect and remediate all such vulnerabilities including on a timely and effective basis.

Further, we may experience delays in developing and deploying remedial measures and patches designed to address identified vulnerabilities.

Vulnerabilities could be exploited and result in a security incident.

We may expend significant resources or modify our business activities to try to protect against security incidents.

Additionally, certain data privacy and security obligations may require us to implement and maintain specific security measures or industry-standard or reasonable security measures to protect our information technology systems and sensitive data.

Risk Factors Related to Regulatory Matters and Compliance

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In response to environmental concerns, some customers and government agencies impose requirements for the elimination of hazardous substances, such as lead (which is widely used in soldering connections in the process of semiconductor packaging and assembly), from electronic equipment.

For example, the European Union adopted its Restriction on Hazardous Substance Directive which prohibits, with specified exceptions, the sale in the EU market of new electrical and electronic equipment containing more than agreed levels of lead or other hazardous materials and China has enacted similar regulations.

containing more than agreed levels of lead or other hazardous materials and China has enacted similar regulations.

Environmental laws and regulations such as these could become more stringent over time, causing a need to redesign technologies, imposing greater compliance costs, and increasing risks and penalties associated with violations, which could seriously harm our business.

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As of December 31, 2023, we had state net operating loss carryforwards of approximately $48.7 million, of which $45.9 million will expire in 2028 through 2043 if not utilized, and $2.8 million will carryover indefinitely.

The federal NOLs generated prior to 2018 will continue to be governed by

the NOL tax rules as they existed prior to the adoption of the 2017 Tax Cuts and Jobs Act (2017 Tax Act) , which means that generally they will expire 20 years after they were generated if not used prior thereto.

The federal NOLs generated prior to 2018 will continue to be governed by the NOL tax rules as they existed prior to the adoption of the 2017 Tax Cuts and Jobs Act (2017 Tax Act) , which means that generally they will expire 20 years after they were generated if not used prior thereto.

The 2017 Tax Act repealed the 20-year carryforward and two-year carryback of NOLs originating after December 31, 2017, and also limits the NOL deduction to 80% of taxable income for tax years beginning after December 31, 2017.

Any NOLs generated in 2018 and forward will be carried forward and will not expire.

There is no current impact to us as we continue to be in a loss position for U.S.

income tax purposes.

There is no current impact to us as the NOLs that we are utilizing in the current year were generated prior to 2018, and therefore, are not subject to the 80% limitation.

Future changes in our stock ownership, many of which are outside of our control, could result in an ownership change under Section 382 of the Code.

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The market price of our common stock is likely to be highly volatile and may fluctuate substantially due to many factors, including:

● the duration and severity of the COVID-19 pandemic and its effects on our business, financial condition, results of operations and cash flows;

● the introduction of new products or product enhancements by us or others in our industry;

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● changes in earnings estimates or recommendations by securities analysts;

● general market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors, including those due to the duration and severity of the COVID-19 pandemic and the military conflict in Ukraine.

● general market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors, including the effects of COVID-19 and the military conflict in Ukraine.

Stock markets generally have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies.

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These exclusive forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees, which may discourage lawsuits against us and our directors, officers, and other employees.

If a court were to find either exclusive-forum provision in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur further significant additional costs associated with resolving the dispute in other jurisdictions, all of which could seriously harm our business.

Effective December 31, 2021, we ceased to be an “emerging growth company,” and certain reduced reporting requirements applicable to emerging growth companies no longer apply to us, which is expected to increase our costs as a public company and place additional demands on management.

Effective December 31, 2021, we ceased to be classified as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act (the JOBS Act).

We have previously taken advantage of certain reduced reporting requirements pursuant to the JOBS Act specifically applicable to emerging growth companies, including exemptions from the requirements of holding advisory “say-on-pay” and the related “say-on frequency” votes on executive compensation.

Since we are no longer classified as an emerging growth company, we are now required to comply with those additional reporting requirements for which we were previously exempt.

For example, we were required to hold a say-on-pay vote and a say-on frequency vote at our 2022 annual meeting of stockholders.

As a result, we expect that we will require additional attention from management with respect to our additional reporting requirements and will incur increased costs, which could include higher legal fees, accounting fees, consultant fees and fees associated with investor relations activities, among others.

If a court were to find either exclusive-forum provision in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur further significant

additional costs associated with resolving the dispute in other jurisdictions, all of which could seriously harm our business.

General Risk Factors

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and international economic and market conditions.

If any of our manufacturing partners, customers, distributors or suppliers experience slowdowns in their business, serious financial difficulties or cease operations, including as a result of the COVID-19 pandemic, our business will be adversely affected.

In addition, the adverse impact of general economic factors that are beyond our control, including, but not limited to, housing markets, recession, inflation, deflation, consumer credit activity, consumer debt levels, fuel and energy costs, interest rates, tax rates and policy, unemployment trends, potential industry downturn, the impact of natural disasters such as pandemics, civil disturbances, terrorist activities and acts of war, including the military conflict in Ukraine, may adversely impact consumer spending, which

may adversely impact our customers’ spending and demand for our products.

If any of our manufacturing partners, customers, distributors or suppliers experience slowdowns in their business, serious financial difficulties or cease operations, our business will be adversely affected.

In addition, the adverse impact of general economic factors that are beyond our control, including, but not limited to, housing markets, recession, inflation, deflation, consumer credit activity, consumer debt levels, exchange rate volatility, fuel and energy costs, interest rates, bank failures, tax rates and policy, unemployment trends, potential industry downturn, the impact of natural disasters such as pandemics, civil disturbances, terrorist activities and acts of war, including the military conflict in Ukraine, may adversely impact consumer spending, which may adversely impact our customers’ spending and demand for our products.

As an example, in the United States, capital markets have experienced and continue to experience volatility and disruption.

Furthermore, inflation rates in the United States have recently increased to levels not seen in decades resulting in federal action to increase interest rates, affecting capital markets.

In addition to the foregoing, adverse developments that affect financial institutions, transactional counterparties or other third parties, such as bank failures, or concerns or speculation about any similar events or risks, could lead to market-wide liquidity problems, which in turn may cause third parties, including customers, to become unable to meet their obligations under various types of financial arrangements as well as general disruptions or instability in the financial markets.

Additionally, the military conflict in Ukraine and escalating geopolitical tensions resulting from such conflict have resulted and may continue to result in sanctions, tariffs, and import-export restrictions which, when combined with retaliatory actions taken by Russia, could cause further inflationary pressures and economic and supply chain disruptions, as well as cause us to experience extended lead times and increased prices from our suppliers.

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industrial accidents;

public health issues, such as the COVID-19 pandemic;

public health issues, such as COVID-19;

cybersecurity incidents;

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Any significant losses that are not recoverable under our insurance policies could seriously impair our business and financial condition.

Unresolved Staff Comments.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business